While retailers across the board, led by industry giant Wal-Mart Stores Inc./quotes/zigman/245476/quotes/nls/wmtWMT, have missed their second-quarter sales targets and cast a shadow over the industry’s critical holiday sales in the second half, the upscale sector’s slowdown has many scratching their heads.

Retail Metrics

That’s because a 2% payroll tax hike that hurts consumers at discounters like Wal-Mart doesn’t affect the upper-income households as much. Meanwhile, the luxury sector traditionally would have seen demand rising along with an improving housing market and rising equity performance.

“The U.S. consumer is healthy, but maybe not for retailers,” wrote Sterne Agee’s Charles Grom, who downgraded Nordstrom to neutral from buy. “While the jury is still out on why retail sales have slowed, we’re becoming more convinced that the recent strength in both housing improvement and autos has ‘crowded out’ discretionary dollars.”

Norstrom’s disappointing anniversary sale “suggests the higher income shopper could be exposed” to the spending shift also, Grom added, and little real wage growth could continue to affect spending.

“The consumer has de-emphasized their apparel consumption as we have observed a renewed interest in ‘big ticket’ consumption,” said Stifel’s Richard Jaffe, who maintained his buy rating on Nordstrom.

To be sure, fashion retailers also have themselves to blame for not giving consumers enough reasons to shop again, after business had been driven by the popularity of colored denim the past two years. Nordstrom said its women’s juniors business has been the most challenging, and it said that’s not related necessarily to any macroeconomic concern. Macy’s, which noted purchasing shift to things like cars, said it’s studying whether it has a good balance of entry-level products and if it should have additional promotions to drive demand.

“We are in a business that tends to travel in cycles,” said Nordstrom CFO Michael Koppel on a call. “We’ve had a very strong last three years coming off the recession.”

The luxury group’s quarterly profit growth, while still outperforming the broader market, has slowed to an estimated 18% growth in the second quarter, from a 27%, 21%, 55% growth in the second quarter of the prior three years each, according to Retail Metrics.

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